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Ford bulls rolling as shares gain

Ford popped on strong China sales at the end of last week, and the bulls are rolling with the move.

optionMONSTER's Heat Seeker tracking system detected the purchase of 45,000 September 18 calls for $0.26 and the sale of an equal number of September 17 calls for $0.62 on Friday. Volume was below open interest at the lower strike, so it appears that a winning position was closed and rolled higher.

The adjustment allows the trader to collect $0.36 while staying in the trade for more potential gains, though the new long calls will lose value if the stock remains below $18 through mid-September. They expire well after the auto maker's new CEO takes charge on July 1.

These calls lock in the price where shares can be purchased, allowing investors to acquire a stock with limited risk or to ride a rally without ever owning it. Traders can profit by selling contracts before expiration or swap them from one strike to another, which is what happened Friday. (See our Education section)

F ended the session up 2.4 percent to $17.08 after reporting that Chinese sales rose by almost one-third. The move follows bullish option activity in rivals General Motors and Toyota earlier in the week.

Overall option volume in Ford was almost 7 times greater than its daily average for the last month, with calls accounting for a bullish 84 percent of the total.(A version of this post appeared on InsideOptions Pro on Friday.)